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Starwood in talks for more hotels in Malaysia

July 4, 2007 — patchay

STARWOOD, the owner and operator of the Sheraton, Westin and Le Meridien, is in various stages of discussion with at least seven parties for possible hotels in Malaysia, including a new brand – Four Points by Sheraton.

“We are in negotiations … two are in advance stages and five are under discussion,” Starwood Asia Pacific Hotels & Resorts Pte Ltd’s regional vice-president for South East Asia Peter Frawley said, adding that each of the hotels will have 300-odd rooms.

Frawley added that the hotels include a mixture of existing hotels and building completely new ones.

While declining to reveal the exact location of the hotels, he hinted that Starwood is inclined to have more representation in Peninsular Malaysia.

When asked where else Frawley would like to see a Starwood hotel, he said: “It makes eminent sense for one (hotel) in Johor Bahru. Penang would also be an area we would like to look at.”

“The brands that are most attractive to owners in Asia Pacific at this point are the Luxury Collection, Sheraton, Le Meridien and Westin,” he said.

He added that Four Points by Sheraton, which is equivalent in service to the Sheraton, a top four-star hotel minus the specifications, is also receiving a lot of interests.

The hotel basically offers full services but costs less to build and is able to compete with a broader range of the market.

Frawley expects the earliest possible date for its ninth hotel in Malaysia to take at least three years.

“Most conversion or greenfield sites would take at least 36 months (to take-off),” he told Business Times in an interview.

Moreover, new openings took into account factors ranging from opportunities, continuing stability of the economy and returns the hotel can generate.

“Sometimes it is prudent to wait for a development and do it at the right time,” he said.

Starwood opened its first hotel, the Sheraton Langkawi Beach Resort in Langkawi, in 1991. Today, it has a total of eight hotels in Malaysia, two of which – Le Meridien Kuala Lumpur and Le Meridien Kota Kinabalu – were added following the takeover of the Le Meridien chain by Starwood Hotels & Resorts Worldwide, Inc.

The other hotels in the group include Sheraton Imperial, She-raton Subang Hotel and Towers, The Westin Kuala Lumpur,The Westin Langkawi Resort & Spa and Sheraton Labuan.

All the Starwood hotels in Malaysia, with the exception of the two Westin hotels, are undergoing or will undergo renovation or refurbishment.

According to Frawley, all the hotels record gross operating profit (GOP). GOP is the cost of doing business or gross revenue (from rooms, food and beverage, laundry or business centre) minus cost of operations (wages, electricity and amenities).

In fact, he said that the alliance to Starwood name makes a difference to a hotel’s performance.

“When Le Meridien Kuala Lumpur’s 2006 performance is compared to that of 2005, we are able to see a significant jump in rate and occupancy of the hotel, which was disproportionate to the growth in city (compared to the growth of other city hotels). It is logical that this is a result of the business generated by the Starwood channel,” he said.

Meanwhile, when asked if Starwood found it worth its while operating a hotel in Malaysia when comparatively it would be able to fetch better rates in other countries in the region, Frawley, who is also in charge of the Indonesia, Brunei and the Philippines operations, said yes.

“Ours is a business of managing other people’s hotel. It is important as a global company to have a significant footprint where our customers (from other parts of the world) want to go, and to service these customers,” he said.